Sept. 3 (Bloomberg) -- Chinese stocks traded in New York
completed their best month since February, led by a record jump
in Qihoo 360 Technology Co., as the software developer started a
search engine that will compete with Baidu Inc.’s product.

The Bloomberg China-US Equity Index of the most-traded
Chinese companies in the U.S. rose 1.4 percent in August to
87.95, the steepest rise since February. Qihoo jumped 52 percent
after analysts said its new online search engine could become
the second-biggest in China after Baidu’s. Online travel company
Ctrip.com International Ltd. surged the most since 2009 and Sina
Corp. climbed for the first time since January.

Qihoo, owner of the nation’s most popular Web browser with
270 million users, entered on Aug. 16 China’s online search
market where Baidu has a share of about 80 percent. The
competition prompted Baidu to take steps that would make it more
difficult for users sending queries from Qihoo’s Web page and
browsers. Qihoo, whose products range from anti-virus software
to desktop applications, forecast on Aug. 21 third-quarter sales
that beat analysts’ estimates.

“Qihoo does have the potential to take some share in
China’s online search market, causing some damage to Baidu’s
current market dominance,” Jiong Shao, the Hong Kong-based head
of China strategy at Macquarie Securities Ltd. said by phone on
Aug. 31. “Considering the huge user numbers of Qihoo’s browsers
and security software, it’s not such a big surprise to see its
search engine is quickly gaining popularity.”

‘Grave Concern’

The iShares FTSE China 25 Index Fund, the biggest Chinese
exchange-traded fund in the U.S., sank 3.3 percent last month to
$33.07, snapping a two-month increase. The Standard & Poor’s 500
Index of the biggest U.S. shares climbed 2 percent in its third
month of gains after Federal Reserve Chairman Ben S. Bernanke
said he wouldn’t rule out steps to lower a jobless rate he
described as a “grave concern.”

Qihoo’s American depositary receipts surged to $22.39 on
Aug. 31, from $14.71 at the end of July.

Monthly active users of Qihoo’s computer-based products and
services rose to record 425 million as of June, from 378 million
a year ago, the Beijing-based company said on Aug. 21. It
forecast third-quarter revenue will rise as much as 73 percent
from a year earlier to $82 million, beating the average $80.3
million estimate of seven analysts surveyed by Bloomberg at that
time.

Price Targets Raised

Macquarie’s Shao raised his price estimate for Qihoo by $4
to $25 on Aug. 22, while Cynthia Meng, an analyst at Jefferies
Group Inc., raised the target by $12 to $35.

Baidu’s ADRs dropped 7.5 percent last month, dragging its
prices down 4.3 percent this year. The company lost search
traffic market share by 4 percentage points to 8 percentage
points to Qihoo, and the trend will continue in the next two
quarters, Alan Hellawell, an analyst at Deutsche Bank AG, wrote
in an Aug. 23 note.

Ctrip.com, the nation’s biggest online travel agency,
surged 29 percent in August to $16.13, the biggest monthly rally
since November 2009. Its smaller competitor Elong Inc. climbed
for the second month, rising 13 percent to $15.

Ctrip estimated third-quarter sales will rise 15 percent to
20 percent in a July 24 statement, after increasing 17 percent
in the previous three months. Elong projected a gain of 10
percent to 20 percent, following a 33 percent growth in the
second quarter, it said Aug. 20.

Sina Surges

Sina, provider of the Twitter-like Weibo service in China,
rallied 24 percent in August, snapping a six-month slump that
was the longest losing stretch since January 2009.

The company’s net income tripled to $33.2 million in the
second quarter, while analysts had expected a loss of $3.9
million, according to the mean estimate of 11 analysts surveyed
by Bloomberg before the report. Weibo had about 80 advertising
customers in the second-quarter and the number will “probably
double” by the end of the year, Chief Executive Officer Charles
Chao said in a conference call that day.